The U.S. Department of Justice hit the companies Tuesday with a federal complaint in Delaware.

Filtration systems for aircraft are highly regulated in the United States because of the gravity of aircrafts running on safe, uncontaminated fuel. Compounding this oversight, industry watchdog groups like the Energy Institute and the Air Transportation Association of America require manufacturers to meet strict quality specifications.

Prosecutors say such factors make it difficult for new domestic competitors to enter the market or for foreign competition to establish a presence on American soil, and that the Parker-Hannifin-Velcon merger will further reduce competition.

“The results would be higher prices, reduced innovation, less reliable delivery times, and less favorable terms of service for the American businesses and military that depend on these critical products,” the 18-page complaint states.

Noting that Parker-Hannifin is well aware of the narrow market, the complaint quotes the company’s former general manager as testifying a few years ago that securing industry approval on fuel-filtration systems is “expensive, time-consuming and difficult.”

“Because the transaction combines the only two sources of qualified aviation fuel filtration products in the United States, the effect of this merger would be substantially to lessen competition or tend to create a monopoly,” the complaint states. “Parker-Hannifin’s acquisition of Clarcor’s aviation fuel filtration business thus violates the antitrust laws.”

Prosecutors say internal documents from the manufacturers show that company officials are aware of the competition problems their merger carries.

“Just weeks before its $4.3 billion merger was announced, the vice president of dusiness development for Parker-Hannifin’s filtration group wrote to the president of the filtration group, identifying ‘the notable area of overlap’ between the merging parties in ‘ground aviation fuel filtration,’” the complaint states. “He asked whether Parker-Hannifin should be ‘forthcoming’ about this ‘aviation antitrust potential.’ Then, later in that same email, he stated that Parker-Hannifin was ‘preparing for the possibility that we may have to divest [Clarcor’s] aviation ground fuel filtration’ business.”

The Justice Department wants that very relief, seeking an order for “Parker-Hannifin to divest tangible and intangible assets, whether possessed originally by Clarcor, Parker-Hannifin, or both, sufficient to create a separate, distinct, and viable competing business that can replace Clarcor competitive significance in the marketplace, and to take any further actions necessary to restore the markets to the competitive position that existed prior to the acquisition.”
The complaint calls Parker-Hannifin and Clarcor “head-to-head” competitors.

“This elimination of head-to-head competition will provide Parker-Hannifin with the power to raise prices without fear of losing a significant amount of sales,” the complaint states,

Prosecutors also note that Clarcor set the industry benchmark in customer-friendly policies like training programs and free shipping. Without any competition, Parker-Hannifin has no incentive to push itself to provide strong customer service, the U.S. government contends.

Parker-Hannifin has not returned a phone call seeking comment.

Company executives had praised the merger in announcing it on Feb. 28.

Rob Malone, Parker’s filtration group president, meanwhile saw the merger as a chance “to help make our world cleaner and safer while equipping our team members with new opportunities to innovate and grow.”